A MiFID investment firm covered by the Investor Compensation Scheme is NOT allowed to do which of the following?

• A. hold any client funds or assets.
• B. advertise the fact that the firm is covered by the scheme.
• C. refer to the scheme in its Terms of Business.
• D. give clients any information about the scheme.

Answer: (B)

The key idea here is how firms communicate about investor compensation protection. A MiFID investment firm that is covered by the Investor Compensation Scheme must avoid marketing claims that imply guaranteed protection or wide, assured coverage. Advertising that the firm is “covered by” the scheme can mislead clients into thinking all losses are fully protected or that every investment is insured regardless of eligibility, limits, or exclusions. Regulators want to prevent that kind of misrepresentation, so stating the firm is covered as a selling point is not allowed. You can still provide neutral, factual information about the scheme or reference it in the Terms of Business, but promotional claims asserting coverage are restricted. The other options involve routine client asset rules or neutral references, which align with standard compliance when used properly.